Calling it a “tremendous victory,” Sarah Leberstein, senior staff attorney for the National Employment Law Group said, “Paying workers less than the minimum wage for their work hours, and not paying an overtime premium after 40 hours a week benefits no one.” According to the advocacy group Caring Across Generations, domestic care is one of the U.S.’s lowest paying industry, with an average hourly wage of $9.61.
A unanimous ruling by a three-judge panel in the D.C. Circuit Court of Appeals on Friday will reauthorize changes made by the Department of Labor to include overtime and minimum wage protections for two million home care workers nationwide. This comes after Judge Richard Leon ruled in a lower D.C. federal court in January that the Labor Department’s 2013 rule change, based on an executive order by President Obama, should be handled by Congress and not the Executive branch. In 1974, Congress passed a law that exempted home care workers from the traditional minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA), as it was considered at the time to be considered casual work, with workers usually employed by individual households. Judge Sri Srinivasan wrote in his opinion, of the “dramatic transformation” of the home care industry since the 1970s, as the modern industry of home health is dominated by “staffing companies that service hundreds of thousands of customers.” The change was supposed to have been implemented at the start of 2015.
Specifically, the appeals panel ruled that the language in FLSA grants the Department of Labor the authority to strike the home care exception from the law. In the opinion, Srinivasan wrote “The department’s decision to extend the FLSA’s protections to those employees is grounded in a reasonable interpretation of the statute and is neither arbitrary nor capricious.” In 2013 the Labor Department changed the definitions of “domestic service employment” and “companionship services.” Under the 2013 definitions, third-party employers like staffing services must pay overtime if a service employee is hired to care for the elderly or disabled persons not able to care for themselves. The new definition separated these workers, who provide much more advanced care than what the 1974 law viewed as workers who provide simple “companionship.” During the 1970s, most elder and disabled care occurred in institutions, with the spread of domestic health care as an $84 billion industry being a relatively new phenomenon.
The Department of Labor called the ruling, “the right thing to do — both for employees, whose demanding work merits these fundamental wage guarantees, and for recipients of services, who deserve a stable and professional workforce allowing them to remain in their homes and communities.” Currently 15 states have their own minimum wage laws affecting domestic health workers, with several of the states including New York, Illinois, Massachusetts and Maryland filing papers in court supporting the rule change. Calling it a “tremendous victory,” Sarah Leberstein, senior staff attorney for the National Employment Law Group said, “Paying workers less than the minimum wage for their work hours, and not paying an overtime premium after 40 hours a week benefits no one.” According to the advocacy group Caring Across Generations, domestic care is one of the U.S.’s lowest paying industry, with an average hourly wage of $9.61. Leberstein added, “Low pay leads to burnout and high turnover and compromises care, which in turn create economic strains on the home care system.”
The National Association for Home Care, the industry’s largest trade group and the rule change’s biggest opponent, has stated that it is considering avenues to challenge the ruling. The Association has lobbied heavily against the changes, agreeing with Judge Leon that lifting the exception will make home care less affordable for patients. The Association believes that the rules will likely reduce the take-home pay of workers, with staffers unwilling to send workers out for assignments longer than eight hours to avoid paying overtime. A coalition of nine states including Arizona, Michigan and Texas have opposed the rule changes saying that it will increase state Medicaid costs and shift financial burdens onto the states. Any sort of legal challenge to the ruling may be difficult to mount, however. The D.C. Appeals panel based its ruling on a 2007 Supreme Court decision stating that “Congress had granted authority to the department to resolve the issue,” according to Srinivasan. The deference to the Department of Labor in both rulings will also likely make challenges to the Department’s rulemaking authority much more difficult in the future, given the discretion granted by the courts.
ABC News/Associated Press – Sam Hananel
Modern Healthcare – Lisa Schencker
New York Times – Noam Scheiber
The Hill – Lydia Wheele